Marathon Invests $150 Million In Bitcoin

[Upgrade00]

Marathon Patent Group, Inc. (NASDAQ:MARA) ("Marathon" or "Company"), one of the largest enterprise Bitcoin self-mining companies in North America, today announced that it has purchased 4,812.66 BTC in an aggregate purchase price of $150 million. As a result, the Company has strengthened its position as one of the only Nasdaq-listed, pure-play investment options for individuals and institutions seeking exposure to Bitcoin.

Bitcoin is adopted by yet another public company, this time it's a pure-play investment option.
Side note: A pure play stock is one which focuses on a single product or service; there is no diversification and it runs on a single means of revenue. In this case, that source of revenue is Bitcoin as Marathon is a mining service which focuses solely on the blockchain technology.

A quick check shows that they bought each Bitcoin at averagely $31,167.79. This goes to show that institutional investment and interest is growing despite the price increase, so a lot of people expect that there is still huge potential for growth and that Bitcoin is the monetary system of the future.

More details:

To ensure the purchase was conducted effectively, Marathon worked with NYDIG, a leading technology and financial services firm dedicated to Bitcoin. NYDIG’s trading, execution, and asset management expertise enabled Marathon to take advantage of favorable market conditions and execute the transaction as efficiently as possible.

“By purchasing $150 million worth of Bitcoin, we have accelerated the process of building Marathon into what we believe to be the de facto investment choice for individuals and institutions who are seeking exposure to this new asset class. We also believe that holding part of our Treasury reserves in Bitcoin will be a better long-term strategy than holding US Dollars, similar to other forward-thinking companies like MicroStrategy,” said Merrick Okamoto, Marathon’s chairman & CEO. “To date, we have contracted to purchase 103,060 miners, all of which are currently expected to be delivered and fully deployed by the end of the first quarter of fiscal 2022. If all miners were operational today, based on the Bitcoin network’s current difficulty rate, we would produce approximately 55-60 bitcoins per day. However, by leveraging our cash on hand to invest in Bitcoin now, we have transformed our potential to be a pure-play investment into a reality. I would like to thank the entire NYDIG team for offering their unique products and services for public companies, and for working with us to expedite this process and ensure the transaction was made on the best possible terms for our business and our shareholders.”

Source: https://ir.marathonpg.com/press-releases/detail/1224/marathon-invests-150-million-in-bitcoin

Some people would wonder why a mining company would wish to purchase Bitcoin while they get then from mining blocks. Well, despite being a mining company, it still holds fiat in it's balance sheet and as a reserve currency as that is still the common choice, however, with their shift to a bitcoin standard, they are pushing the idea that Bitcoin can function effectively in that regards and there's no reason to sell it or convert it to centralized currencies.

[tippytoes]

@ OP, you forgot to include your article reference link.
But read also from this site about this marathon investments.
https://www.globenewswire.com/news-release/2021/01/25/2163436/0/en/Marathon-Invests-150-Million-in-Bitcoin.html

As they bought above 31k level, that means, they have strong expectations that bitcoin will increase much further and not go below 30k. As they are a mining company, I guess they are taking advantage of the cold weather of quebec, and looking for profits investing more miners in the next months to come.

[STT]

31k is a pretty large buy in price, they are late in this game plan but early on a decade perspective of course just for a business plan they should have been buying the whole of 2020 not just during this rise so that part is something that sticks out for me.   Companies often buy assets, their own shares even but they do so with a particular plan to mark against markets and volume within that market.    

they are pushing the idea that Bitcoin can function effectively in that regards and there's no reason to sell it or convert it to centralized currencies.

They will have liabilities in dollars still, taxes obviously so liquidity is important.  A bigger plan so they arent forced into any selling at any time is important, its not so straight forward imo but no doubt they get interest from investors.

[The Sceptical Chymist]

Huh, there's another company I'll have to add to my stock watchlist.  I did see this when I looked them up just now:



....which may mean nothing, or it might mean they're headed toward being delisted from the NASDAQ.  Looking at their chart, they've already had to do more than one reverse split, which is never a good omen.  It's nice that they bought all of that bitcoin, but they're a stock I wouldn't touch with a ten foot pole. 

I wonder if they're hoping bitcoin will explode and thus boost their stock price a little bit (I can't imagine not hoping that, but I'm also wondering if that's the sole reason for the purchase.

[jaysabi]

Huh, there's another company I'll have to add to my stock watchlist.  I did see this when I looked them up just now:



....which may mean nothing, or it might mean they're headed toward being delisted from the NASDAQ.  Looking at their chart, they've already had to do more than one reverse split, which is never a good omen.  It's nice that they bought all of that bitcoin, but they're a stock I wouldn't touch with a ten foot pole. 

I wonder if they're hoping bitcoin will explode and thus boost their stock price a little bit (I can't imagine not hoping that, but I'm also wondering if that's the sole reason for the purchase.

This was a penny stock before the price of bitcoin sent crypto mining companies through the roof. Do your homework on this, this isn't a company I'd invest in personally. The stock was up 2200% last year because of the price of bitcoin driving everything bitcoin-related insane, however the company is not profitable, they're cash flow negative, and they have a lot of debt.  One thing they did right was issuing a ton of shares when their stock price went crazy (they more than doubled outstanding shares last year), and used that to buy a ton of new miners.  They've also cut a deal with an energy provider to get very cheap power, but it remains to be seen if these two developments will drive this company to profitability.  My prediction is it will not, the underlying business is poor and the stock price will continue to mimic the price of bitcoin while the legacy business continues to struggle.  The new mining power will deliver decreasing returns over time and I doubt they'll produce enough profit to ever pay off the investment (because they've never been able to before).

[The Sceptical Chymist]

This was a penny stock before the price of bitcoin sent crypto mining companies through the roof. Do your homework on this, this isn't a company I'd invest in personally.

I believe it when you're telling me it was a penny stock--and they did do a few reverse splits if I'm interpreting the data correctly.  I always get confused if 1:4 is a one share-->four shares split, or if it means the opposite.  I assumed in the case of Marathon that they were reverse splits given that there was no justification for a traditional split, as the stock price was nowhere near high enough. 

I'm not really interested in the company and don't plan to research it further, but I do want to track its progress as I do with a few other blockchain-oriented companies or ones like MSTR that own tons of BTC.

[Upgrade00]

Companies often buy assets, their own shares even but they do so with a particular plan to mark against markets and volume within that market.   

Buying at the current price doesn't mean they didn't have a plan. A lot of companies are just beginning to really take notice of Bitcoin. And rather than hesitating for more drops in price, they choose to jump in as a difference of a couple thousand dollar buy-in price would not matter much in the long term. Hesitating could also push the price farther away as it was >$40k some few weeks ago.

I wonder if they're hoping bitcoin will explode and thus boost their stock price a little bit (I can't imagine not hoping that, but I'm also wondering if that's the sole reason for the purchase.

Well in the article the CEO was quoted to have said:
"We also believe that holding part of our Treasury reserves in Bitcoin will be a better long-term strategy than holding US Dollars, similar to other forward-thinking companies like MicroStrategy,”
... So the sole reason may have not been to boost their business side by investing in Bitcoin, and it may have something to do with them realizing that Bitcoin is better than fiat for the long term and they'll be better off having it in their reserve coffers.

[zanezane]

Many big institutions are now getting into Bitcoin, they can't afford to miss the chance of buying bitcoin even on an expensive price right now and this proves to me that Bitcoin will fly more and as a small investors, I should also think positively and look forward for the peak price of Bitcoin.

This is a good news for Bitcoin because this means that the prices will be going up again as another big company are pouring in to invest in Bitcoin, at the current price point I think that they will be hodling their Bitcoin for a long time. Hopefully, other companies affiliated to Marathon will do the same and invest into Bitcoin.

They invest bitcoin like investing gold

They have to adopt as well because they see how Bitcoin works and that's a good decision that can result to a big pump on the whole market of Bitcoin.

Bitcoin is better than gold when it comes to private enterprises, Gold is for governments. This pump will spur another selling for smaller Bitcoin hodlers and I think that for awhile the prices will be balance out but we will definitely see another ATH this year.

[Haunebu]

This isn't surprising. With BTC rising in value with time, more and more investors will continue investing in it(Big and Small)  due to the financial opportunities available through trading BTC on a regular basis.

This is a good thing, but more people need to use BTC as a currency or payment method instead of just viewing it as an asset all the time.

This is a tough ask, but not impossible. Using BTC as a payment method more often would definitely attract more investors and improve its overall value over time.

[yhiaali3]

In the recent period, we have begun to notice the interest of large institutions and companies in Bitcoin, this indicates the belief of these large institutions in the future of Bitcoin and that it could be the currency of the future.
Marathon Patent Group did what could be called a double whammy because on the one hand it bought a large amount of bitcoin at a good price and on the other hand it bought mining miners so they could get 55-60 bitcoins per day, this is a really big and bold step, after a while Marathon will gets a large share of the Bitcoin market.

[exstasie]

A quick check shows that they bought each Bitcoin at averagely $31,167.79.

Interesting. Microstrategy bought their last bags at $31K too. Makes me think the market needs another sub-$30K plunge, just to make them both sweat.

This goes to show that institutional investment and interest is growing despite the price increase

It's a mixed bag. Some institutions are investing, others appear to be unwinding.

Two metrics to note, both have to do with Grayscale. First, inflows have slowed, suggesting institutional interest may be cooling off. Second, the GBTC premium has massively dumped and is currently around 7%, the lowest I've seen it in many months, probably years.

[meanwords]

This is quite big, not just the value but the psychological impact on the smaller investors who wish to invest in Bitcoin but still have doubts.

This is a good thing, but more people need to use BTC as a currency or payment method instead of just viewing it as an asset all the time.

This is a tough ask, but not impossible. Using BTC as a payment method more often would definitely attract more investors and improve its overall value over time.

That's still wishful thinking because the fee of Bitcoin is still quite absurd to be used as a payment method. Many people will dislike the fees. It will definitely attract more people but it's still far too early for that right now. The only way I can see Bitcoin as a payment method is using a third-party wallet app.

[davis196]

This was a penny stock before the price of bitcoin sent crypto mining companies through the roof. Do your homework on this, this isn't a company I'd invest in personally. The stock was up 2200% last year because of the price of bitcoin driving everything bitcoin-related insane, however the company is not profitable, they're cash flow negative, and they have a lot of debt.  One thing they did right was issuing a ton of shares when their stock price went crazy (they more than doubled outstanding shares last year), and used that to buy a ton of new miners.  They've also cut a deal with an energy provider to get very cheap power, but it remains to be seen if these two developments will drive this company to profitability.  My prediction is it will not, the underlying business is poor and the stock price will continue to mimic the price of bitcoin while the legacy business continues to struggle.  The new mining power will deliver decreasing returns over time and I doubt they'll produce enough profit to ever pay off the investment (because they've never been able to before).

Just because a company doesn't have positive cashflow and big profits that doesn't mean the investors won't buy the stocks of the company for pump&dump profits or expectations for profits in the long term.
Do you think that Tesla has a positive cashflow?The Tesla stocks increased their price 10 times in about 3 years.I still don't believe that the Tesla business model will be very sustainable and lucrative in the long term.
Marathon are just scaling their mining business.Their mining business might not be profitable at the current BTC price,but it will become profitable at a 50K-100K USD Bitcoin price.Maybe that's why Marathon are betting more $ on Bitcoin.

[stompix]

Guys, before cheering, you should know a bit about the company:
https://www.globenewswire.com/news-release/2021/01/05/2153383/0/en/Marathon-Patent-Group-and-DMG-Blockchain-Solutions-to-Form-the-Digital-Currency-Miners-of-North-America-DCMNA-and-Launch-North-America-s-First-Cooperative-Mining-Pool.html

Especially this part:

“Clean block mining” that adheres to the Office of Foreign Asset Control’s (OFAC’s) compliance standards and reduces the risk of mining blocks that include transactions linked to nefarious activities

You're cheering the investment of a company that wants to police the network based on what they see as a clean or a suspect transaction!

[goldade]

This is a perfect example of the fact that there isn't a best time to buy bitcoin. Over the years, I've been faced with questions such as
When is the best time to buy? Isn't it too late to buy now? Isn't bitcoin way to expensive to buy now? Well, I always answer such questions with this phrase 'it's never too late to get on the moving train'.
Marathon buying $150 million worth of Btc shows how much of recognition bitcoin is getting in the mainstream world. A lot of top companies are now accepting and even investing in bitcoin. This is good for the mass adoption of bitcoin.
I believe so many companies and individuals will see this as a good sign to buy bitcoin

[slapper]

What an astonishing price during a decrease like this. Many people are afraid to buy bitcoin cause of this big sell-off but this company does give people hope. Nearly 4500 bitcoins priced $31000 is a perfect buy for this firm. I believe they will be one of the most profitable companies in the next 5 years

[tomahawk9]

You're cheering the investment of a company that wants to police the network based on what they see as a clean or a suspect transaction!

if DCMNA members start censoring/rejecting transactions because they're "sketcky", there will be other pools that will accept those transactions, no? so all in all it's not a big deal?

heh, i found this part pretty funny from the article you posted:

“To date, companies such as ours have relied on pools primarily based in Asia to connect to the Bitcoin network, and we have been frustrated by the lack of transparency and audited data.<...>"

yeah, every mining pool out there is so looking forward to start adding KYC policies to the bitcoin network, truly what the bitcoin community has wanted for a while, right?  /s  

btw, i wonder what "OFAC standards" actually mean when talking about bitcoin mining and transactions? like what are those standards that you have to meet in order for your tx to get accepted by this heavily pro KYC pool?

[stompix]

if DCMNA members start censoring/rejecting transactions because they're "sketcky", there will be other pools that will accept those transactions, no? so all in all it's not a big deal?

Theoretically, no! But, there is a possible problem with it.

If "legit" transactions accepted by this pool also make it through other blocks occupying space and the blocks mined by them are just at let's say 10% of capacity since they don't have enough "clean" tx to fill it up it means that the chain capacity of confirmation will drop by (x% their share/percentage of the blocks they fill).

Worst case scenario, taking into account they have a contract with bitmain over 100k miners, although the delivery will take close to a year, assuming no other large change in hashrate they could own somewhere from 8-10%, if all of those blocks are at 50% you see a 5% drop, it will hurt a bit in tx fees, If it's 10% and nearly empty blocks, say goodby to fees under 3-5$.

It might not be something threatening but at the same time, there is no way spinning this into something positive, unfortunately.

btw, i wonder what "OFAC standards" actually mean when talking about bitcoin mining and transactions? like what are those standards that you have to meet in order for your tx to get accepted by this heavily pro KYC pool?

No idea!

[sana54210]

This isn't surprising. With BTC rising in value with time, more and more investors will continue investing in it(Big and Small)  due to the financial opportunities available through trading BTC on a regular basis.

This is a good thing, but more people need to use BTC as a currency or payment method instead of just viewing it as an asset all the time.

This is a tough ask, but not impossible. Using BTC as a payment method more often would definitely attract more investors and improve its overall value over time.

I believe what you are asking will happen eventually but in order for that to happen we need to first handle the speed and cost of spending money on crypto. Now if you put your money into some exchange, buy and sell crypto there, and take out your profit back into fiat, you are not spending too much in the way, sure there is trading fee's but that is very little, so if you are a good trader you could make a ton of money.

However lets assume you want to buy something, sure you can buy something that is 1k+ dollars and not care about the fee's, but what about something 20-25 bucks? You want to pay 5-10 bucks fee just to do that? I happen to pay 8 bucks on a 20 dollar thing just recently, I really wanted it so I would have paid 50 bucks, but it made zero sense to pay 40% fee on it. So yeah, people "should" use it as a currency but they won't with this situation as long as fee's are high.

[Upgrade00]

It's a mixed bag. Some institutions are investing, others appear to be unwinding.

Two metrics to note, both have to do with Grayscale. First, inflows have slowed, suggesting institutional interest may be cooling off. Second, the GBTC premium has massively dumped and is currently around 7%, the lowest I've seen it in many months, probably years.

Could be a minor pull back to assess the market as it has been going sideways for sometime now. Or we may have hit the ceiling with the current wave of interest and the next set of institutional investors would react if the market changes direction.

You're cheering the investment of a company that wants to police the network based on what they see as a clean or a suspect transaction!

An attempt to check the network is certainly unfavorable and negates the decentralized nature of Bitcoin, and I wasn't aware of this when I initially made the post. Adoption is welcome, but what is more important would be holders who actually understand how Bitcoin works and uses it the right way.

<snip>

Okay, I'll need a bit of clarity.
You're saying the fact that they are only accepting transactions which they consider to be clean, means they would not be able to completely fill blocks they mine, this would then result in them having to increase the feerate to balance out the rewards they get from transaction fees? Or am I completely missing the point?